Orange juice prices in crop losses from greening disease

General Comments: Futures were higher in New York and Sao Paulo, and London was closed. Arabica prices rallied from the lows as traders look at the potential for major losses in producing areas due to the rust. The size of the loss is becoming apparent and traders are starting to take notice. Ideas that futures had fallen far enough to take care of current supply encouraged some short covering. Brazil producers are holding crops for now and are waiting for higher prices before selling, or else some government support via a marketing program. Reports of rust in Central America and the production cuts that it are still in the press, and major crop losses are being estimated by traders and producers. Current crop development is still good this year in Brazil, and production areas are getting drier weather for the developing crop, although there are a few showers around. There is some talk the drier weather could stress trees. Production ideas remain big there. Central America crops are mostly harvested. Colombia is reported to have good conditions.

Overnight News: Certified stocks are higher today and are about 2.739 million bags. The ICO composite price is now 131.04 ct/lb. Brazil should get scattered showers. Temperatures will average near to above normal. Colombia should get a few showers, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed to up with objectives of 147.00, 152.00, and 180.00 May. Support is at 136.00, 134.00, and 132.00 May, and resistance is at 141.00, 144.00, and 147.00 May. Trends in London are down with objectives of 2020 and 1990 May. Support is at 2015, 2000, and 1970 May, and resistance is at 2080, 2100, and 2130 May. Trends in Sao Paulo are mixed. Support is at 168.00, 166.00, and 165.00 September, and resistance is at 173.00, 177.00, and 180.00 September.

SUGAR

General Comments: Futures closed mixed to mostly lower on ideas of big production, mostly from Brazil. Ideas of weak demand and big supplies keep traders negative to prices. Nearby months were able to gain a bit on some speculative buying as traders note the big problems with logistics in Brazil. The market could be starting a new trend down. Futures seem to uncover new consumptive demand every time the market moves below 1800 in New York and plenty of offers when a rally is made. So far, no new demand is being reported, but futures are finding some buying support, anyway. Reports indicate that Brazil will start harvesting next month and that a big offer is expected. Brazil will start to offer a little less as mills there prepare for greater domestic Ethanol demand as blends for cars have been changed by the government. Reports from Brazil say that the new crop production looks to be strong, so the diversion into more domestic ethanol use will help offset increased sugarcane production. Exports from Brazil continue to be very strong overall despite the port problems.

Overnight News: Scattered showers are expected in Brazil through Friday.

Chart Trends: Trends in New York are down with objectives of 1725 and 1610 July. Support is at 1760, 1740, and 1710 July, and resistance is at 1790, 1800, and 1810 July. Trends in London are down with no objectives. Support is at 490.50, 487.00, and 484.00 August, and resistance is at 500.00, 505.00, and 510.00 August.

COCOA

General Comments: Futures closed a little higher on reports of smaller offers from producing countries, mostly from Ivory Coast. The flow of Cocoa from western Africa is falling and traders are taking note. Weather continues good in Africa and as some crop size estimates for next year start to increase. Ideas are that production in the coming year will be short, even with increased production ideas. Some buying has been sen in the next crop months because of these ideas. The market is trying to mount a seasonal rally now that the main harvest is over in Western Africa. Ideas are that current low prices should créate new demand and that the main crop harvest is over in Western Africa and much of Asia so that supplies on offer could also be less. The weather is forecast to be warm and somewhat wet in West Africa this week. For now, traders expect good mid crop production from West Africa. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable.

Overnight News: Scattered showers are expected in West Africa. Temperatures will average mostly above normal. Malaysia and Indonesia should see episodes of isolated showers. Temperatures should average near normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are lower today at 4.641 million bags.

Chart Trends: Trends in New York are mixed to up with objectives of 2240 and 2370 May. Support is at 2160, 2110, and 2075 May, with resistance at 2190, 2220, and 2235 May. Trends in London are mixed. Support is at 1430, 1420, and 1405 May, with resistance at 1475, 1495, and 1520 May.

About the Author

Jack Scovilleis a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.